What is baseball arbitration?

5/5 - (3 votes)

Baseball arbitration is a sort of arbitration in which the arbitrator is presented with a proposed financial award from each side. The arbitrator will select one award from the submitted awards without modification following the conclusion of the hearing.

Thus, the arbitrator’s discretion in making a decision is constrained in baseball arbitration. It allows each party to the arbitration the chance to make the arbitrator a fair suggestion in the hopes that the decision-maker would accept the arbitrator’s conclusion. Arbitration involving baseball is more frequently employed in business disputes. It is also known as a final-offer arbitration or a “either/or” arbitration.

What is baseball arbitration in MLB?

baseball arbitration

Unbelievably, some of the league’s best talents earn the very minimum amount in MLB. In baseball, teams can essentially sign players to cheap contracts until they have proven themselves and are entitled to large salaries.

Arbitration essentially implies that a player and his team were unable to come to terms on a player’s compensation based on his performance on the field and in contrast to other players who had recently signed contracts.

They want a hearing in arbitration where the judges might be biased in favors of the player or the team.

The first time that organizations are required to pay more than the MLB minimum salary, which was $570,500 last season, arbitration eligibility represents a significant career milestone for players.

For the young player, crossing that threshold might mean receiving money that will change their lives and making them less eager to sign a contract extension that is far below market value.

MLB arbitration rules

baseball arbitration

When a club offers a contract to a player who is unsigned for the following season, the player and club must agree on a pay range. By the middle of January, a number must be chosen by both sides.

The team and athlete will proceed to salary arbitration if they are unable to come to an agreement on a salary for the forthcoming season. Both the athlete and the team submit a wage figure that they believe is reasonable, typically based on the pay of players of comparable caliber and ability in recent years.

A panel of impartial arbitrators hears the matter in February and makes a decision that favors the player or the team.

Before officially entering arbitration, a player and the team frequently come to an agreement on a pay, and in recent years, franchises have a tendency to sign players to extensions, frequently “buying out” years of arbitration and occasionally free-agency years.

Players typically receive raises throughout the arbitration process, but their pay cannot be reduced by more than 20% from the previous year.


Why is it called baseball arbitration?

baseball arbitration

To address that, let’s look at what arbitration actually means according to the dictionary: the hearing, determination, and resolution of a dispute or the resolution of disagreements between parties by a person or persons chosen or agreed upon by them.

Exactly that is what we are discussing about. To decide what would be fair for a player who is eligible for arbitration, the MLB basically intervenes with an impartial adjudicator.


However, we’ve referred to the process as “arbitration” or “arbitrator” as if there were just one arbitrator. The dispute is typically heard by a three-person arbitration panel. These individuals are frequently labor lawyers who seek to evaluate a case fairly without having an existing stake in the result.

Additionally, they consider various laws, including the collective bargaining agreement (CBA), labor laws that apply to baseball players, and opinions expressed by the players association. Arbitrators then decide on a wage amount that is reasonable for both parties, usually for a one-year contract.

Because it covers the complete procedure of resolving contract disputes prior to Spring training, this time frame is referred to as “arbitration.”


How it works:

To better understand the procedure, let’s use the 2021 MLB SALARY ARBITRATION as an example. The procedure started in early December, reached a new turning point in mid-January, and was completed this past Friday.

  • Deadline for non-tenders: Teams had until December 2 to decide whether or not to make contract offers to their players who were eligible for arbitration (those with three to six years of service time, plus “Super Twos”). A record 59 players received no offers, making them free agents right away.
  • Players who were dissatisfied with the level of their negotiations have until January 15 to file for arbitration. Only 13 of the hundreds of players whose contracts were offered failed to be agreed upon.
  • Arbitration hearing: Based on a combination of performance, intangibles, prior remuneration, and current salaries for comparable players, both sides—typically represented by labor lawyers—present a salary figure for the following season.
  • Procedure: The player’s representative is given one hour to make its case first. The squad will then have an hour to do the same after a 15-minute break. Before each side has 30 minutes to submit rebuttals, there will be a 30-minute break to finalize counterarguments.
  • A panel of three independent arbitrators (also labor lawyers) has a day or two to consider and make a decision after hearing the arguments. The decision can only include the player’s or the team’s number, nothing else.
  • Settlement: The player and team have the option to reach an agreement before the hearing and on the day(s) that follow the hearing and the decision. The team typically prevails 60% of the time.

What is a baseball arbitration provision?

baseball arbitration

This clause in the CBA helps ensure that certain eligible players will have access to an arbitration process if they believe that they need one. Every team, whether they are the Kansas City Royals or the New York Yankees, will be required to go through this procedure if there is a dispute over a player who is eligible for arbitration.

As previously indicated, that qualification may be based on years of service, also known as years of big-league service. A player might occasionally be a “Super Two” player. This describes a player who has more than two but fewer than three years of cumulative major league service time and is still considered one of the top players among those who are eligible for arbitration in that particular year. The athlete might then be eligible for arbitration for an additional year as a result.

Other rules of arbitration

  • Past compensation: Generally speaking, based on past compensation, arbitration doesn’t dramatically increase an MLB player’s salary, but it also doesn’t drastically decrease it either.
  • Baseball arbitration is often known as the “salary arbitration procedure,” which determines a player’s proper pay.
  • Baseball arbitration that requires both parties to accept the agreed-upon financial settlement is known as “binding arbitration.” This refers to the fact that the arbitration panel will choose only from these two numbers after each side has chosen a number they believe to be fair.



The Baseball Arbitration Process adds yet another distinct level to baseball’s intricacy. While most fans may be aware of a player’s arbitration, they might not be familiar with the complete procedure. You now know a few things regarding the procedure after reading this post.

One is that you may anticipate players looking to increase their earnings since they feel they are worth it. Two, a team will try to find ways to pay a player less money. Third, an arbitrator may participate in the proceedings to assist in resolving the disagreement between the two parties.



Leave a Comment